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Will Google step in with a $60 billion megabid as eBay spins off PayPal?

PayPal: Giant bid from Google?

In spinning off its PayPal division, Bloomberg said eBay was heeding demands by activist shareholder Carl Icahn and "giving the business independence it can use to contend with rising competition from Apple and Google."

But last night the speculation was that the split might put the pieces in play - with Google bidding for Pay Pal. One figure mentioned: around $60 billion.

Another possible acquirer: : the flush with cash Alibaba Group which has just pulled off a record U.S. trading debut and is on the hunt for deals, said Bloomberg.

Gene Munster, an analyst at Piper Jaffray told Bloomberg that with a takeover of PayPal, Google would stand to become the leader in online payments, which could be integrated into its Android system and counter Apple Inc.’s new Apple Pay.

Daniel Johnson, a money manager at River Road Asset Management declared ,

“Now that PayPal will be a separate company, there’s absolutely a possibility of an acquisition.”

Johnson added, “There’s a strategic benefit that PayPal would bring, whether it’s to Google or Alibaba.”

Representatives for Alibaba and Google declined to comment.

However, eBay Chief Executive Officer John Donahoe said a deal wasn't the motivation behind the split.

“This is clearly not being done to set any business up for sale,” Donahoe said in an interview. “This is being set up for each business to compete and succeed in their respective environments.”

EBay and PayPal will become independent companies in 2015, the California-based company has said in a statement today.

Donahoe, who said in March a full separation was “not a good idea,” won’t have an executive role in the businesses.

Donahoe sparred with Icahn for two months at the beginning of the year after the billionaire bought a stake in January, and the clash took an hostile tone until a settlement in April.

eBay bought PayPal in 2002 to add online-payment services. The unit has almost tripled sales in the five years ended in 2012.

Howevere, said Bloomberg, the business of online payments is increasingly moving to mobile devices, where PayPal isn’t as dominant. Apple this month announced Apple Pay, a way for people to use an iPhone to pay for goods in stores.

Mobile payments in the U.S. are projected to total $118 billion by 2018, up from $3.5 billion this year, according to EMarketer.

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